The Second Age of Compliance- Ethics Column by Tracey Calvert

Goodbye Handbook,

hello SRA Standards and Regulations!

 

The SRA has finally set a launch date for the SRA Standards and Regulations. On 25 November 2019, the Standards and Regulations will replace the current SRA Handbook. We will be expected to hit the ground running, so time is of the essence in terms of preparing for what lies ahead.  In this article, I’d like to share with you some personal observations of the changes which are likely to have an impact on your work with some suggestions as to how to introduce them into your workplace.

 

In some ways, the new Standards and Regulations are introducing quite radical and/or revolutionary regulatory concepts. For example, SRA-authorised law firms will co-exist with freelance solicitors and solicitors providing certain legal services from within unauthorised businesses. This has the potential to increase competition in the market place with consumers having more variety of legal services providers to choose from. It also, insofar as the right to provide certain services from unauthorised businesses, begs the question as to whether this is a freedom that your business should be considering.

 

Some questions you should be asking:

 

  • Would you want to hive off legal services into an unauthorised entity?
  • Even, perhaps, and this very much depends on what types of services you offer, do you need to be authorised at all?
  • What do you need to consider where you find yourself with a freelancer or an unauthorised provider on the other side of a transaction?

 

In other ways, the regulatory content is less revolutionary and more fundamental. My reading of the SRA Standards and Regulations is that there is a reconfiguration of regulatory priorities, so that basic ethical duties are given back their rightful centre-stage place. This was not the case with the SRA Handbook; when this was launched in 2011 there was an urgent need to emphasise the change of regulatory style and the way in which law firms would be expected to interact with the regulator. Now that the SRA has established this way of working with us, we can focus our minds on our professionalism again.

 

The SRA Principles were used in 2011 to clarify our duty to cooperate with the SRA and LeO (Principle 7) and to run orderly businesses (Principle 8). We needed to make it crystal clear to our stakeholders that we understood our duties to consumers; to deliver proper service standards (Principle 5) and to protect client money and assets (Principle 10). Move forward to 2019, these messages are understood and these Principles have been displaced (not erased, but moved to other sections of the Standards and Regulations). The new set of Principles harks back to yesteryear and promotes our core professional values (trust, integrity etc.), together with a new Principle that requires you act with honesty.

 

The two new Codes of Conduct provide useful subliminal messages. Why do we need a separate Code of Conduct for Solicitors, Registered European Lawyers and Registered Foreign Lawyers? My interpretation is that the freedom to practise in different ways brings with it the need to ensure that the individual has their own personal behavioural framework; this Code provides the “factory setting” for the individual and whatever they may be asked to do because of their particular style of practice, failure to comply with this Code will blow a personal fuse.

 

The Code contains duties which the individual must observe; do I know who my client is? Am I upholding duties of confidentiality? Am I observing prescribed standards when providing legal services to clients? Also, and significantly, am I confident that those I manage and/or supervise are competent? In other words, every individual solicitor who practises will be expected to comply with this Code and, in so doing, uphold the collective professional reputation.

 

The Code of Conduct for Firms has a more practical slant; it’s taken the redundant Principles and added them to compliance requirements and created a manual for how to run an authorised law firm in an ethical and business-like way. This is where you will find the compliance officer roles and duties which include in future the need to report ‘serious’ breaches rather than the current ’material’ breaches. In truth, there is in my view little difference between serious and material as both adjectives had been used in the SRA Handbook to describe matters which the SRA expects to receive information on.

 

My suggestions for your “to do” list are these:

 

  • Read the new materials
  • Identify those areas where there is either (a) need for change to reflect the new language and/or (b) scope for change because of the new regulatory world
  • Talk to the right colleagues to make this happen. Does I.T. need to be involved in your updating project? Do the partners need to be made aware of new possibilities to the way in which you work?
  • Draft and/or update your internal systems and controls
  • Train the relevant people in the external and internal changes so that there can be no reliance on ignorance to carry on as before

 

So, it’s the start of a new compliance age. Compliance roles were introduced into the mainstream in 2011 and the ‘Compliance 2.0 era” is a signal we have come of age. Between 2011 and 2019, we have helped our law firms successfully navigate many legal and regulatory changes. Adapting to the SRA Standards and Regulations is simply the next project. The near-final version of the Standards and Regulations are available on the SRA website (www.sra.org.uk).

 

 

Tracey Calvert,  23 April 2019

Oakalls Consultancy Limited

tcalvert@oakallsconsultancy.co.uk

www.oakallsconsultancy.co.uk

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